ARKANSAS

INHERITANCE TAX

Tax imposed. A tax is imposed upon the transfer of any tangible property within the State and of intangible property or any interest therein or income therefrom, in trust or otherwise, to persons or corporations. (14001)

Transfers taxable. The tax applies (1) when the transfer is by will or by the intestate laws of this State of any intangible property, wherever situated, or of tangible property within the State, from any person dying seized or possessed thereof while a resident of this State; (2) to the transfer of the following property belonging to deceased nonresidents which passes by will or inheritance under the law of any other State or country: (a) Real estate and tangible property, including money on deposit in this State; (b) intangible personal property, including bonds, securities, shares of stock, and choses in action kept in this State; (c) shares of stock of domestic corporations, certificates of which are within or without this State, unless the transferer at time of his death was a resident of a State or Territory of the United States or of any foreign country which at the time of death. did not impose a like tax as to residents of this State; (3) to transfers by a resident of tangible property within this State, or of intangible property wherever located, or by a nonresident of tangible property located within this State by deed, grant, bargain, sale, or gift, made in contemplation of the death of the grantor, vendor, or donor, or intended to take effect in possession or enjoyment at or after such death; (4) to proceeds of life insurance policies or contracts upon the death of the insured who was a resident of this State at the time of death, by the terms thereof, passing directly to the benefit of any person or persons, other than direct descendants, ascendants, or widow of the insured, in the nature of a gift, bequest, or devise, not based upon valuable consideration; (5) to transfers whereby such person or corporation becomes beneficially entitled, in possession or expectancy, to any property or income thereof; (6) and whenever any person or corporation exercises a power of appointment derived from any disposition of property, such appointment is deemed a transfer taxable hereunder. (14001)

Exemptions. The following exemptions from the tax are allowed: Property transferred to public, charitable, benevolent, educational, and like institutions, corporations, and associations, or in trust therefor; property of the clear market value of $6,000 transferred to the widow of the decedent, by dower or otherwise; of the value of $4,000 if transferred to a minor child of the decedent; and of the value of $2,000 if transferred to any of the other beneficiaries. (14004)

Classification of beneficiaries.-Class 1: Father, mother, husband, wife, child, wife or widow of a son or husband of a daughter, adopted or mutually acknowledged child, lineal ascendants and lineal descend

ants, of decedent. Class 2: the half-blood, of decedent. Rates of tax.—The rates

Brothers and sisters, including those of
Class 3: All others.

(14005) (percent) of tax imposed on the market value of the property or interest transferred are as follows: (14005, 14006)

Payment of tax; interest; penalty. This tax is due and payable to the probate court at the death of the decedent; if not paid within 6 months thereafter, interest is charged at the rate of 6 percent per annum; if not paid within 12 months, a penalty of 10 percent per annum, in addition to the interest, is charged. The penalty is not charged if an extension is granted by reason of unavoidable delay; but interest at 6 percent is charged from the expiration of said 12 months until the cause of delay is removed, after which 10 percent is charged until payment of the tax. (14008)

Tax lien. This tax is imposed upon the clear market value of the property transferred, and it remains a lien upon such property until paid. (14001)

Disposition of proceeds.-The proceeds of this tax are credited to the general fund of the State. (14011)

Administration of act.-The administration of these provisions is in the department of revenues, under the direction and control of the commissioner of revenues. (14012)

Source of information.-Chapter 158, Pope's Arkansas Statutes, 1937, supplemented by letter from commissioner of revenues.

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CALIFORNIA

INHERITANCE AND ESTATE TAXES

Tax imposed. Under the Inheritance Tax Act of 1935, a tax is imposed upon the transfer of any real or personal property, or of any interest therein or income therefrom, in trust or otherwise, to persons, institutions, or corporations not hereinafter exempted. This tax is imposed upon the market value of such property at the date of death of the decedent, but only upon the excess of the exemption granted. (1, 2)

Transfers taxable.-The transfers taxable under this act include those made by will or by the intestate or homestead laws of this State; or by any order of court setting aside property; or by deed, grant, bargain, sale, assignment, or gift without valuable and adequate consideration; or if made in contemplation of the death of the transferor, or to take effect at or after his death; and transfers made as advancements. Whenever real or personal property is held in joint names and is transferred under the doctrine of survivorship, the entire amount transferred is considered as having belonged to the decedent joint owner and as having been devised or bequeathed by him to the survivor, and is taxed accordingly, except such part as the survivor proves belonged to him originally and never belonged to the decedent. Special provisions prevail for the taxation of community property. Powers of appointments, bequests or devises to executors or trustees in lieu of commissions or allowances, and certain proceeds of life or accident insurance policies, to the extent and under the conditions specified in the act, are subject to this tax. (2)

Additional estate tax.-Where the tax imposed by this act is of a lesser amount than the maximum credit of the Federal estate tax 2 because of said tax herein imposed, then the tax provided for by this act shall be increased so that the amount of tax due this State shall be the maximum amount of the credit allowed under the Federal law. Where no tax is imposed by this act because of the exemptions herein, or for any other reason, and a tax is due the United States under the Federal law, then a tax is due this State equal to the maximum amount of the credit allowed under the Federal law. (2)

Deductions allowed. In determining the market value of the property transferred, the following deductions, if obligations of the decedent or his estate and paid by the estate or transferee, may be made from the appraised value thereof: Debts of decedent owing at time of his death; expenses of funeral and last illness; State, county, and municipal taxes and assessments which are a lien against said property at date of death; ordinary expenses of administration; and the amount due or paid the Federal Government as an inheritance or estate tax. (2)

The provisions of law relating to this tax are shown on p. 7.

Exemptions. All transfers of property not in excess of the following amounts are exempt from this tax: If transferred to a wife, $24,000; to a minor child, $12,000; to each of the other persons in class 1, $5,000. Transfers to beneficiaries of classes 2, 3, and 4 are exempt if not in excess of $2,000, $500, and $50, respectively. No tax is imposed on transfers by a decedent to a person in class 1 if such property was transferred to such decedent not more than 5 years prior to his death by another decedent of class 1 and a tax paid thereon to the State. All proceeds of any Federal war risk insurance policy of any veteran of the World War which is payable or which may become payable to the estate of such veteran are exempt. All property transferred to societies, corporations, and institutions exempted from taxation, or to any public corporation, or to any society, corporation, institution, or association engaged in or devoted to charitable, benevolent, education, public or other like work, or for similar purposes, is exempt; but only in cases where such society, corporation, institution, or association is organized or existing under the laws of this State, or in case the property transferred is limited for use within this State. A reciprocal provision exempts transfers of this type to any society (corporation, institution, or association) organized or existing under laws of another State (or Territory or foreign country) if the laws of such other State exempt similar transfers to a society organized or existing under the laws of this State. The intangible personal property of a nonresident decedent is exempt from the tax imposed hereunder, if the laws of the State of residence of such nonresident allow a similar exemption in favor of nonresident decedents. (6)

Classification of beneficiaries.-The beneficiaries under this act are classified as follows: Class 1: Husband, wife, lineal ancestor or lineal issue, of decedent; adopted or mutually acknowledged child of decedent or any lineal issue of any such child. Class 2: Brother, sister, or a descendant of brother or sister, of decedent, or wife or widow of a son, or husband of a daughter, of decedent. Class 3: Brother or sister of father or mother, of decedent, or a descendant of such brother or sister. Class 4: All other persons and corporations. (4)

Rates of tax. The rates of tax imposed on transfers of property to the several classes of beneficiaries are as follows: (5)

Payment of tax; interest; discount. This tax is payable to the county treasurer of the proper county, who, after deducting his commissions and amounts required to be paid out by him, remits the balance to the State treasurer; it is due at the death of the decedent, and if paid within 2 years no interest is charged; if not so paid, interest

is charged at the rate of 10 percent per annum from the accrual date; but the court may waive this 10 percent penalty if the delay is unavoidable, in which case 7 percent per annum is charged from the expiration of 2 years until the cause of delay is removed, after which 10 percent per annum is charged. If the tax is paid within 6 months of its accrual (and no additional tax is imposed by reason of this tax being of a lesser amount than the maximum credit of the Federal estate tax), a discount of 5 percent is allowed. (7, 14, 19, 20)

Tax lien.—All taxes imposed by this act, together with the interest thereon, until paid in full, are and remain a lien upon the interest of the decedent in the property which passes or is transferred; and the person to whom such interest passes or is transferred, and all administrators, executors, and trustees of every estate so transferred or passed, are liable for the taxes until the same have been paid. (3)

Disposition of proceeds. All taxes collected under this act are paid into the general fund of the State (sec. 22). Five percent of the amount received by the State each year is appropriated and set aside to constitute a part of the teachers' permanent fund for retirement purposes. (ch. 626, 1937)

Administration of act. The provisions of this act are administered and enforced by the State controller.

(8)

Sources of information.-Chapter 358, Session Laws of 1935. Chapters 296, 333, and 626, Session Laws of 1937.